Town's Former Comptroller Made Unauthorized Transfers of $1.5 Million

North Greenbush officials provided inadequate oversight of the town's former comptroller, resulting in unauthorized interfund transfers of $678,712 and more than $920,000 in loans to other funds that were not repaid on time, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. Auditors found the town board could not monitor or manage town operations because it was not given complete, accurate and timely financial information by the former comptroller.

"North Greenbush's financial records were so poorly maintained that the town board has no idea of the town's true current financial condition. The board is going to have a challenging time allocating 2012 budget resources if it does not get a handle on its finances," DiNapoli said. "The town supervisor and board need to ensure that all accounting records and reports are complete, accurate and up-to-date. I urge town officials to act on the audit's recommendations immediately."

DiNapoli's auditors found that from 2009 to 2011 the town's former comptroller did not properly maintain accounting records, perform timely monthly bank-to-book reconciliations, or provide monthly financial reports to the board.

The current comptroller has yet to file the annual update document (AUD) summarizing the town's financial information for the 2010 fiscal year to DiNapoli's office. The town has contracted with a certified public accounting firm to assist the current comptroller with correcting the records which will allow board members to determine the town's true financial condition.

DiNapoli's auditors discovered that from 2008 to 2010 interfund transfers made from the water and sewer funds to the general fund were $678,712 more than the amount approved by the board. Because the transfers were not authorized, the actual financial condition of the general fund was overstated and the financial condition of the water and sewer funds was understated.

Interfund borrowing is used to meet short-term cash flow needs. These loans are supposed to be approved by the board and be paid back by the end of the year, with interest, if the loan is between funds with different tax bases. Auditors found the town's general fund borrowed from other funds and the loans remain unpaid with no apparent plan to repay them. During 2009 and 2010, the town reported $921,808 in loans between funds, of which the general fund owed $614,543 to other funds.
Due to the inaccuracy of the accounting records and the lack of interim reporting, the board and the public cannot evaluate the true financial condition of the town as of the end of 2010. This also means the town does not have the accurate financial information necessary to make the appropriate decisions over their budget allocations for the current 2012 budget. DiNapoli's auditors recommended that the board and town officials:

Implement policies to ensure that the town's accounting records are complete, accurate and up-to-date;

Review the interfund transfers to the general fund and determine if they were authorized and appropriate;

Address the outstanding interfund loans and develop a plan for their repayment;

File the town's AUD with the state Comptroller and town clerk within 90 days after the close of the fiscal year, or 120 days after the close of the fiscal year if an extension is granted; and

Identify the financial reports that the town comptroller should provide to them on a regular basis to help manage town finances and evaluate financial condition.

Town officials generally agreed with the recommendations and indicated they planned to take corrective actions.